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Discussion in St. Petersburg on Economic Policy

This article was originally published in our Russian comrades’ newspaper Proletarskij Internatzionalism.

On June 20th, at the plenary session of the St. Petersburg International Economic Forum (SPIEF), Russian President Vladimir Putin explained that wherever the foot of a Russian soldier steps, it is Russian land [Kremlin.ru, June 20th, 2025]. This statement was made in the context of discussions about the state of the Russian economy. It clearly reflects the Kremlin’s intention to keep the occupied territories of Ukraine, but perhaps it also conceals the desire to take advantage of the situation to expand. It is indicative that the demands from the hawks’ camp in Russia for a final solution to the Ukrainian issue are becoming increasingly louder. Then there is the usual capitalist question of price: how much will it cost?

The state of the Russian economy is not rosy. Let us look at some statements made at the SPIEF. Minister of Economic Development Maksim Reshetnikov emphasised that according to current business sentiment, [...] we are already on the brink of entering a recession. German Gref, president of the savings bank Sberbank, lamented the cessation of all serious investments.

Government and central bank

The same forum hosted a debate between the government’s economic bloc and the Central Bank of Russia (CBR). At the moment, military Keynesianianism seems to be gaining ground, and its supporters are calling for the CBR to abandon its target of reducing inflation to 4% a year. Addressing Elvira Nabiullina, president of the central bank, Reshetnikov stated: I support the idea that, in addition to believing in the 4% [target], one should also love the economy and its growth. Since the sectors of the economy related to war are growing faster than the production of civilian goods, some might conclude that the minister is encouraging a love of weapons. There is some truth in this: Russia is still at war, and global imperialist confrontation continues. However, it is likely that the supporters of military Keynesianism are guided by an idea expressed at the time by one of the theorists of Russian economic nationalism, Yuri Yaremenko [1935-1996]: In my opinion, the point of industrial conversion is not to use defence companies to produce goods for civilian use, but to try to use the resources concentrated in the defence sector to restructure our entire economy. In this respect Russia, the successor of the USSR, has only partially succeeded.

Meanwhile, voices of hope from the liberal camp are raising that the struggle between the siloviki (politicians whose background is from the military or government security forces) and the technocrats will intensify by autumn, when the preparation for the 2026 budget begins. One of the key points will undoubtedly be military spending. By the end of 2025, it will amount to around $172 billion, including defence and national security expenditures – approximately 7.7% of GDP. The 2025-27 plan places military spending at about 7% of GDP for the entire period. According to liberal-camp commentators, changes should not be expected. Alexandra Prokopenko, in an article of June 16th for the Carnegie Centre, wrote: Putin is determined to replenish stockpiles and equip his military with the most modern kit informed by wartime innovation. This will take several years [...]. The Kremlin relies on the inertia of militarisation: it will help maintain employment, the utilisation of factories’ capacity and macroeconomic stability, while the government smoothly transitions to a peace economy.

We will see if this plan can be implemented and, above all, if it was what the Kremlin leaders have in mind. Responding to journalists’ questions on June 27th, after the conclusion of the Eurasian Economic Union summit in Minsk, Putin acknowledged that Russia’s military spending is considerable, emphasising that this is obviously one of the problems, including for the budget, that we must address. Putin admitted that Russia has funded its high military expenses through inflation which we are making efforts to counter: We are determined to send our economy to a ‘soft landing’ in some areas [Kremlin.ru, June 27th, 2025]. This statement could be read as a kind of support for Nabiullina, who, despite attacks from almost all fronts, remains at the helm of the CBR.

Meanwhile, amid the demographic crisis and the effects of the war in Ukraine, Russian capital is increasingly attracted to the struggle for low-cost foreign labour. According to the Ministry of Labour, 47,000 migrant workers from distant countries were employed in Russian factories in 2024. This is an utterly insignificant figure, less than one thousandth of the total employed in the Russian economy. Most are migrants from countries with which Russia has a visa exemption regime: China, India, Turkey, and Serbia.

Demographic crisis and need for immigrants

While the bourgeoisie attracts immigrants to fill the gaps in the labour market and proposes to conclude an agreement with India to train workers for the Russian economy, anti-migrant hysteria continues to pour xenophobic statements from the walls of the State Duma and the offices of law enforcement agencies. Last year’s terrorist attack at the Crocus concert hall in Moscow led to the xenophobic decision to exclude from schooling immigrant children that do not speak Russian. This year, the Duma expressed concern that there are thousands of children who are not attending school and proposed to solve this self-created problem by expelling from the country the parents of children who do not attend school. Communist Party MP Mikhail Matveyev has called for the immediate expulsion of these foreigners: There will only be one option: expulsion along with their children. Back to their native villages! [Nezavisimaya Gazeta, June 11th].

At the same time, the leading experts of Russian imperialism are aware of the importance of the demographic problem and the related issue of the struggle to attract migrant labour. When asked about his attitude towards long-term economic forecasts in a lengthy interview given to the government newspaper Rossiyskaya Gazeta on June 22nd, Aleksandr Dynkin, president of the Institute of World Economy and International Relations (IMEMO), gave an unequivocal answer: The most reliable basis for long-term assessments is demographic statistics, from which estimates on the future economic strength of States can be obtained. Demography in capitalism is above all a question of surplus value production and, secondly, as Marx emphasised in Capital, a market issue, since the bourgeoisie needs workers to buy the goods that they themselves produce.

The issue of migration is the subject of a detailed report of last June by Andrei Kortunov, director of research at the Russian International Affairs Council (RIAC). Let us look at the expert’s key forecasts: The total labour force in the countries of the Global North will decrease by at least 100 million people by 2050 if current demographic trends continue, even despite the active involvement of increasingly older age groups in economic activity. At the same time, in the countries of the Global South, the total labour force will increase by about 1.5 billion people, although still lagging behind the North in terms of average active life expectancy. This forecast is sufficient to understand where the epicentre of economic power is shifting globally. From this, considering the current demographic dynamics in Russia, we can make a projection on the further decline of the economic weight of Russian imperialism.

An important fact must be added, for Russia and from a strategic point of view: while Russia’s population is expected to decrease to 135 million by 2050, that of the Central Asian countries will increase to 94 million; in a quarter of a century, the difference will be reduced by over 20 million. In this context, this statement by Dynkin is eloquent: If the Russian population were to magically grow by 50 or, better still, by 100 million people, then we could talk about alternatives to migration.

Technological delay

Dynkin himself draws attention to a simple economic rule: It is the price of labour that forces the introduction of technology. If labour is cheap, there is no point in introducing technology. It is relatively cheap labour, along with the economies of scale of production, which enables the Russian military-industrial complex to produce shells at a price four times lower than that of the German manufacturer Rheinmetall.

The low cost of labour is associated with social passivity and the absence of workers’ organisations. The presence of a large layer of labour aristocracy on the one hand, and, on the other, the self-exploitation of workers in their own plots of land at home or in second part-time jobs, preserves the current social contract and the resulting low wages.

At the same time, if labour remains relatively cheap, there is no reason to expect a serious technological breakthrough in the national economy. If we add to this the international sanctions and other economic problems, the claims of a technological breakthrough can be regarded, for the time being, as unfounded dreams.

Here it is worth recalling the statement by the Russian president mentioned at the beginning. The relative weakness of the economy, even before the start of the invasion of Ukraine, led experts close to the Kremlin to discuss the advantages of hard power in solving problems and to praise the wonderful world of power politics.

We do not intend to give lectures to those who sit in the Kremlin. The lesson should be learned by our class. The Russian State has always paid generously with the blood and sweat of our comrades for the annexed territories. If we do not want to be once again an instrument in the hands of the ruling class, we have no alternative but to become an autonomous force with an internationalist revolutionary strategy.

S.S.

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